Mortgage lending rules look set to be relaxed as part of the biggest shake-up of UK banking regulation for more than 30 years.
The government is widely expected to announce a major overhaul of financial controls, including easing of restrictions on banks introduced after the financial crisis in 2008 when many banks faced collapse.
The changes, which will reportedly be presented as an example of post-Brexit freedom to tailor regulation specifically to the needs and strengths of the UK economy, will undoubtedly help support prospective homebuyers if home-loans, as expected, become easier to access.
But there will undoubtedly be opposition to the planned changes, with critics pointing to the lessons of the financial crisis.
The plans to ease regulations on financial services are being described as a second “Big Bang” – a reference to the deregulation of financial services by Margaret Thatcher’s government in 1986.
It is understood that the rules forcing banks to legally separate their retail lending arms from their riskier investment operations will be reviewed, as will rules governing the hiring, monitoring and sanctioning of senior finance executives.
The government has already announced it will abolish a cap on bankers’ bonuses and allow insurance companies to invest in long-term assets like housing.
After the financial crisis, large banks were required to separate or ‘ring fence’ their domestic banking operations, including mortgages, from their investment banking operations, that were deemed riskier. But that looks set to change as regulation is loosened.